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EMCOR (EME) Q1 Earnings Match, Revenues Miss Estimates
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EMCOR Group Inc. (EME - Free Report) reported first-quarter 2020 results, wherein earnings met the Zacks Consensus Estimate but revenues missed the same. Shares of EMCOR dropped more than 9%, following the earnings release.
Earnings & Revenues
The company reported adjusted earnings of $1.35 per share, which matched the consensus mark but increased 5.5% from the year-ago quarter, attributable to strength in healthcare and manufacturing market sectors.
Revenues during the quarter totaled $2.3 billion, missing the consensus mark of $2.32 billion by 1%. That said, the reported figure grew 6.5% year over year, of which 2.7% was organic growth, led by double-digit improvement in U.S. Mechanical Construction and Industrial Services segments.
The U.S. Construction segment recorded revenue improvement of 6.2% year over year, supported by strength in healthcare and manufacturing market sectors. Operating margin remained flat year over year in the quarter.
Within U.S. Construction, the U.S. Electrical Construction and Facilities Services segment’s revenues declined 0.5% but operating margin improved 30 basis points (bps) year over year. Nonetheless, the U.S. Mechanical Construction and Facilities Services segment reported revenue growth of 10.9% from a year ago. Operating margin remained on par with the year-ago level.
Revenues in the U.S. Building Services segment registered year-over-year revenue growth of 1.2%. This segment faced the maximum disruption from the COVID-19 pandemic as the quarter progressed, primarily due to complete or partial closure of customer facilities. Operating margin declined 140 bps year over year. The U.S. Industrial Services unit’s revenues grew 19.9% and operating margin improved 30 bps year over year. The growth was led by strength in its field services operations, as a result of strong execution on several large turnarounds.
The U.K. Building Services segment’s revenues increased 4.5% and operating margin expanded 120 bps year over year.
Operating Highlights
Selling, general and administrative expenses — as a percentage of revenues — were 9.9%, up 30 bps from the prior-year period.
Operating income totaled $106 million during the quarter, 3.6% higher than the prior-year period, supported by its focus on project execution. However, operating margin of 4.6% was 10 bps lower than the prior-year period.
Liquidity & Cash Flow
As of Mar 31, 2020, the company had cash and cash equivalents of $347.1 million compared with $358.8 million at 2019-end. Total debt (excluding operating leases) was $504.5 million, up from $312.2 million recorded on Dec 31, 2019. Total debt to capitalization was 19.9%, up from 13.2% at 2019-end.
In the quarter, EMCOR used $78.8 million cash for operating activities compared with $57.4 million a year ago.
In March, EMCOR entered into a $1.6-billion credit agreement, comprising a $1.3-billion revolving credit facility and $300 million term loan. It has an option to further increase the revolving credit line to $1.9 billion of capacity.
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EMCOR (EME) Q1 Earnings Match, Revenues Miss Estimates
EMCOR Group Inc. (EME - Free Report) reported first-quarter 2020 results, wherein earnings met the Zacks Consensus Estimate but revenues missed the same. Shares of EMCOR dropped more than 9%, following the earnings release.
Earnings & Revenues
The company reported adjusted earnings of $1.35 per share, which matched the consensus mark but increased 5.5% from the year-ago quarter, attributable to strength in healthcare and manufacturing market sectors.
Revenues during the quarter totaled $2.3 billion, missing the consensus mark of $2.32 billion by 1%. That said, the reported figure grew 6.5% year over year, of which 2.7% was organic growth, led by double-digit improvement in U.S. Mechanical Construction and Industrial Services segments.
EMCOR Group, Inc. Price and EPS Surprise
EMCOR Group, Inc. price-eps-surprise | EMCOR Group, Inc. Quote
Segment Details
The U.S. Construction segment recorded revenue improvement of 6.2% year over year, supported by strength in healthcare and manufacturing market sectors. Operating margin remained flat year over year in the quarter.
Within U.S. Construction, the U.S. Electrical Construction and Facilities Services segment’s revenues declined 0.5% but operating margin improved 30 basis points (bps) year over year. Nonetheless, the U.S. Mechanical Construction and Facilities Services segment reported revenue growth of 10.9% from a year ago. Operating margin remained on par with the year-ago level.
Revenues in the U.S. Building Services segment registered year-over-year revenue growth of 1.2%. This segment faced the maximum disruption from the COVID-19 pandemic as the quarter progressed, primarily due to complete or partial closure of customer facilities. Operating margin declined 140 bps year over year. The U.S. Industrial Services unit’s revenues grew 19.9% and operating margin improved 30 bps year over year. The growth was led by strength in its field services operations, as a result of strong execution on several large turnarounds.
The U.K. Building Services segment’s revenues increased 4.5% and operating margin expanded 120 bps year over year.
Operating Highlights
Selling, general and administrative expenses — as a percentage of revenues — were 9.9%, up 30 bps from the prior-year period.
Operating income totaled $106 million during the quarter, 3.6% higher than the prior-year period, supported by its focus on project execution. However, operating margin of 4.6% was 10 bps lower than the prior-year period.
Liquidity & Cash Flow
As of Mar 31, 2020, the company had cash and cash equivalents of $347.1 million compared with $358.8 million at 2019-end. Total debt (excluding operating leases) was $504.5 million, up from $312.2 million recorded on Dec 31, 2019. Total debt to capitalization was 19.9%, up from 13.2% at 2019-end.
In the quarter, EMCOR used $78.8 million cash for operating activities compared with $57.4 million a year ago.
In March, EMCOR entered into a $1.6-billion credit agreement, comprising a $1.3-billion revolving credit facility and $300 million term loan. It has an option to further increase the revolving credit line to $1.9 billion of capacity.
Zacks Rank
EMCOR — which shares space with MasTec, Inc. (MTZ - Free Report) , Dycom Industries Inc. (DY - Free Report) and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) in the Zacks Building Products - Heavy Construction industry — currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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